State Senate Liquor Control Board Testimony Was Confusing and Contradictory

Editor's Note: Jim Panyard is a reporter for PA Independent.  He can be reached at Jim@PAIndependent.com and 717-920-1819.

The state Senate's first foray into the current debate over whether to privatize the state monopoly on liquor and wine sales consisted of more than two hours of confusing and contradictory testimony Feb. 14

Proponents and opponents of eliminating the state Liquor Control Board (LCB) and selling wholesale and retail liquor and wine licenses appeared before the state Senate Law and Justice Committee with a wide variety of analysis, assumptions, theories and suppositions that effectively cancelled out each other at the end of the day.

Committee Chair John Pippy (R-Allegheny) called Monday's public hearing in anticipation of rapid passage of a bill in the state House sponsored by Majority Leader Mike Turzai (R-Allegheny), which would privatize LCB operations and expand the number of liquor and wine outlets around the state. Mr. Turzai believes the measure could bring a windfall of $2 billion to state coffers, while maintaining or increasing the amount of tax revenues generated annually by alcohol sales in the commonwealth.

The Turzai proposal would auction off 750 retail and 100 wholesale licenses.

Previous attempts by former Republican Governors Dick Thornburgh and Tom Ridge to divest the state of its liquor and wine monopoly failed.

Mr. Pippy promised more hearings on the issue in the near future and said the LCB and state store employees will be invited to testify. He added the hearings point to no specific piece of legislation and are informational in nature.

Jim Sgueo, president and CEO of the National Alcohol Beverage Control Association (NABCA), told the committee it is difficult to compare the controls of various states on alcohol because of the proliferation of different types of controls by other states.

He spoke of conflicting studies on the impacts of various state control and emphasized he feels "alcohol is very unique commodity and, as such, deserves unique treatment."

Mr. Sgueo said NABCA takes no position on privatization issues, but will provide any information it can to aid in the decision-making process.

The emphasis on mixed data with each state having a different set of political and economic factors was also emphasized by Leonard Gilroy, director of government reform for the California-based Reason Foundation, a free market think tank.

The move toward privatization of government services has increased over the past two years as economic woes have threatened to cripple the state and federal governments, Mr. Gilroy said. States have to ask themselves if all the functions they provide are truly government functions, he said.

State Sen. Jim Ferlo (D-Allegheny) said it appears privatization of government services actually pits "profiteers" against state government.

"We've got great stores, great prices, and great union employees. They system is not broken. What is all this craziness?" Mr. Ferlo asked rhetorically.

Mr. Gilroy responded he sees "no problem with putting the private sector to work to serve the public."

Ted Miller of the Pacific Institute for Research and Evaluation said his economic analysis of possible privatization of the LCB shows it will lead to increased underage drinking and about 800 additional state deaths per year due to injuries and illness. He also estimated additional costs to the commonwealth each year of about $135 million, due medical costs, lost tax revenues and criminal justice costs.

On the other hand, Anthony Davies of Duquesne University told the committee his studies indicate no evidence underage drinking or DUI fatalities increase in a privatized system.

Mr. Ferlo, who is opposed to the privatization effort, said he had heard about "lies, damned lies and statistics" but prefers "my own analytical method - common sense experience."